TitanPad

TitanPad.com - A collaborative, free, online word processor.

• Each user is given their own colour so others can keep track of who has written what.
• Is updated in real time; users see what each other is typing, as they're typing it.
• Could be used as part of teaching essay writing skills.
• FREE, quick, easy and NO signup required. Users just share a link with others to type into their web browsers and they are able to join.
• Encourage them to use a bit.ly or goo.gl service to shorten the links, making them easier for others to note down.

sync.in is a website that does pretty much the same thing.

It is down to individual preference; experiment with both!